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June 14, 2012

Americans Still Blame Bush for Bad Economy

Meanwhile, Edward Lazear and Robert Reich take opposing views on reasons for the current economic weakness

Former President George W. Bush speaking in New York in April.

A new Gallup poll shows Americans still blame former President George W. Bush for the nation’s ailing economy more than President Obama—a stark finding five months before an election in which economic issues have been front and center.

The Gallup survey, released Thursday and based on telephone interviews with 1,004 adults between June 7 and 10, contained variously encouraging or discouraging elements for Republicans or Democrats alike.

While Bush is blamed by 68% of Americans, compared to just 52% who fault Obama, that is down from the 80% blame Bush got when Gallup first asked the question in July 2009, six months after Obama’s inauguration. Meanwhile, the negative assessment of Obama has held steady at around half of the American population since 2010 (while in July 2009 just 32% found him blameworthy).

Also of note, about half of Republicans (49%) blame Bush for the poor economy (compared to 83% of them who hold Obama at fault), while Democrats are mostly lined up behind Obama, with 90% blaming Bush (and just 19% assigning blame to Obama). Respondents could blame both presidents.

Perhaps the one thing uniting all Americans is their identification of the economy as the most pressing national problem, Gallup reports.

For that reason, the issue of who bears responsibility for an economy that most Americans view negatively (again, according to Gallup) is likely to emerge as a key campaign issue.

As if on cue, today’s Wall Street Journal featured an op-ed titled “Whose Fault is Today’s Bad Economy?” by Edward P. Lazear, who chaired the President’s Council of Economic Advisors during George W. Bush's administration. An op-ed published earlier in the week by former President Bill Clinton’s former labor secretary Robert Reich, has a decidedly different view of what is causing today’s economic woes.

Lazear, currently affiliated with Stanford University’s Hoover Institution, compares the president to a replacement pitcher whose team is down by three runs in the fourth inning. After some initial success, the new pitcher gives up five runs in the sixth inning, and then tells reporters he didn’t pitch well because the team was behind before he entered the game in the fourth.

Lazear’s point is that it is Obama’s policy choices after the U.S. emerged from recession three years ago that are responsible for “a new wave of slowdowns.” In particular, Lazear argues that Obama’s emphasis on spending has had results opposite to what the administration’s preferred Keynesian economic theory predicts:

“The data show that real government spending was slightly lower in fiscal 2010 than in 2009, but GDP growth rates were higher in 2010 than in 2009. More significant, government spending in 2011 was about $150 billion higher than in 2010 and GDP growth slowed.”

Lazear, who advocates tax reform, expanded trade and less regulation, concludes: “The pitcher's failure to throw strikes this late in the game is not a consequence of what happened during the first three innings. It is because he is throwing the wrong pitches.”

The article by Reich, currently a professor at U.C. Berkeley (a longtime rival to Lazear’s Stanford), is titled “Why the Economy Can’t Get Out of First Gear,” and is published on Reich’s blog and elsewhere. While Reich’s view is very different from Lazear’s, it is not its exact opposite. For example, Reich says the anemic recovery is “not even as some liberals contend, because the Obama administration hasn’t spent enough on a temporary Keynesian stimulus.”

The reason the U.S. economy can’t get out of first gear, according to Reich, is “because American consumers, whose spending is 70 percent of economic activity, don’t have the dough to buy enough to boost the economy—and they can no longer borrow like they could before the crash of 2008.”

Reich cites the attention-getting Fed report released Monday that shows personal income has dropped nearly 8% since 2007 while Americans’ median family income slid nearly 40% between 2007 and 2010, down to 1992 levels.

The solution, according to Reich, lies in income redistribution. He cites data showing the top 1% wealthiest Americans held 24% of the national income in 1928 (a tad above today’s levels), just before the Great Depression. That share of national income declined to just 10% by 1957 after the New Deal economic programs broadened the middle class and fueled economic growth, Reich argues.